WPC< 2a B?Kf Z CG Timesphoenix#Xx6X@DQQ#X@#",tB^ f ^;C]ddCCCdCCCCddddddddddCCY~~vCN~sk~CCCddCYdYdYCdd88d8ddddJN8ddddYYdYddddddCddddddddd8YYYYYY~Y~Y~Y~YC8C8C8C8ddddddddddYdddddsdXdXXXddx|X~d~d|XdddddddC8ddddoddd|8|H~d|8|8dtddddHHdlLlLlLkd|H|8~dddddddXXXd~ddkd~ddxCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCYQQddddddFddddFCChhd44ddxxdddvooChdF"dhddCCxCddoddCdYds]xUvdYYCCCCx~oxoY~NYdYC8YooYdYxsdxdd~YYxoxxx~CdxYxxxxCCdddddddxCsdYC\   pxtll\tll@\@\`LHP LaserJet 5LHPLAS5L.PRS5Xw PE37\\y"]eXP2    b 3|xЊ#Xw PE37WXP#|xCG TimesCourierCourier Boldpage numberpage number J2PQP2Z ?7vphoenix#Xx6X@DQX@# Rainbow/PUSH Comments on Joint Reply DSILVERMWiley, Rein & Fielding 2 .Q...heading 1heading 1X` hp x (# (#  (#X` hp x (#heading 2heading 2X` hp x (#` (# ` (#X` hp x (#heading 3heading 3X` hp x (#` (# ` (#X` hp x (#heading 4heading 4X` hp x (#  (#   (#X` hp x (#2.;.iheading 5heading 5X` hp x (#h (# h (#X` hp x (#heading 6heading 6X` hp x (#h (# h (#X` hp x (#heading 7heading 7 heading 8heading 8 2!  l  v/!heading 9heading 9 A7#B2PQP#  #Xx6X@DQX@#Default Paragraph FoDefault Paragraph Font headerheader X` hp x (#(#(#X` hp x (#footnote textfootnote text  2S% !v#vk$r$footerfooter X` hp x (#(#(#X` hp x (#Body LeftBody Left Body TextBody Text endnote referenceendnote reference 2O'v%r%lm&v&endnote textendnote text footnote referencefootnote reference page numberpage number Quote IndentQuote Indent 2 0'.)+-toc 7toc 7X` hp x (#` (#`` (#`X` hp x (#toc 1toc 1  X` hp x (#(#`(#`X` hp x (#toc 2toc 2X` hp x (#4` (#`4` (#`X` hp x (#toc 3toc 3X` hp x (#4` (#`4` (#`X` hp x (#28;0Y2w46toc 4toc 4X` hp x (#4 (#`4 (#`X` hp x (#toc 5toc 5X` hp x (#4h(#`4h(#`X` hp x (#toc 6toc 6X` hp x (#4h(#`4h(#`X` hp x (#toc 8toc 8X` hp x (#( (#`( (#`X` hp x (#2[<85 X;toc 9toc 9X` hp x (# (#` (#`X` hp x (#8wC;,WXw PE37XP&?xxx, Q#x6X@`7X@?xxx,Yx `7X&R&HHH, f,H6X@`7h@2< ?< X  ?< U 1 1!2Xdd˄ ( ?< headerX` hp x (#%'0*,.8135@8: footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Joint Reply at 9192.>#Xx6X@DQX@# to deflect questions of discrimination and the potential for its perpetuation by the companies if the proposed merger is approved. Meanwhile, evidence that demonstrates redlining by the companies in their Atlanta networks reveals these denials as just smoke and mirrors.   heading 2X` hp x (#` (# A.APPLICANTS WRONGLY ATTEMPT TO SHIFT THE BURDEN OF PROOF TO PETITIONERS, FAIL TO ADDRESS CRITICAL ELEMENTS OF THE REDLINING ISSUE AND PRESENT NO EVIDENCE TO SUPPORT THEIR CLAIMS    heading 2 ` (#` hp x (# Under the Bell Atlantic/NYNEX standard, the #XX2PQXP# #Xx6X@DQX@#burden is on the applicants to demonstrate that the transaction will be in the public interest, convenience and necessity.#XX2PQXP##footnote reference#Z footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Bell Atlantic/NYNEX Order at 20009, 37.Z#Xx6X@DQX@# In this regard, the Applicants have claimed their primary public interest benefit is that the proposed merger will bring #XX2PQXP# #Xx6X@DQX@#meaningful competition#XX2PQXP##Xx6X@DQX@# to the local exchange market. Yet, the Applicants offer nothing to support either these claims or a conclusion that their merger would serve the interests of all members of the public ! including minority and lowincome residents and small businesses.    Instead, the Applicants have said #XX2PQXP# #Xx6X@DQX@#prove it#XX2PQXP##Xx6X@DQX@# when confronted with petitioners#XX2PQXP##Xx6X@DQX@# redlining concerns. WorldCom and MCI respond to these issues by saying that #XX2PQXP# #Xx6X@DQX@#it is important to note that no allegations of past impropriety have been made.#XX2PQXP##footnote reference#6 footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Joint Reply at 92.6#Xx6X@DQX@# The companies then suggest that the Commission should set these concerns aside because #XX2PQXP# #Xx6X@DQX@#there is no record evidence that either MCI or WorldCom has ever engaged or would engage in objectionable behavior.#XX2PQXP##footnote reference#0 footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Id at 9293.0#Xx6X@DQX@# Finally, WorldCom#XX2PQXP##Xx6X@DQX@#s counsel offered the most succinct statement of the companies#XX2PQXP##Xx6X@DQX@# party line:   I think their arguments are misplaced. I think it#XX2PQXP##Xx6X@DQX@#s telling that these concerns are hypothetical and speculative. Nobody has pointed to a single example of where WorldCom or MCI have sought to exclude certain customer bases, nor would it make any economic sense for them to do so.#footnote reference#e footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#  Ѝ)footnote reference) Paul Farhi and Mike Mills, #XX2PQXP#"#Xx6X@DQX@#Foes See Lawyer#XX2PQXP##Xx6X@DQX@#s Civil Rights Agenda in Attack on MCI," Washington Post, Feb. 11, 1998, at A1.e    Therefore, while WorldCom and MCI refuse to provide evidence to make possible a meaningful analysis of their local networks, they point to the absence of analysis as justification to ignore the potential for redlining. Regardless, as will be shown below, evidence acquired by Rainbow/PUSH points to where WorldCom and MCI have #XX2PQXP# #Xx6X@DQX@#sought to exclude certain customer bases#XX2PQXP##Xx6X@DQX@# in the buildout of their Atlanta networks and may suggest a pattern of discrimination by WorldCom and MCI. The Bell Atlantic/NYNEX Order requires facts, nothing less. Considering the only recent evidence of MCI and WorldCom#XX2PQXP##Xx6X@DQX@#s #XX2PQXP# #Xx6X@DQX@#commitment#XX2PQXP##Xx6X@DQX@# to urban residents ! a decision to locate new headquarters and computer facilities away from the central cities of Washington, D.C., and Jackson, Miss. ! it is imperative that they be required to prove what underlies their claims of #XX2PQXP# #Xx6X@DQX@#meaningful competition#XX2PQXP##Xx6X@DQX@# in the local market. heading 2X` hp x (#` (# B.EVIDENCE SUGGESTS REDLINING IN ATLANTA, CASTS DOUBT ON APPLICANTS#XX2PQXP##Xx6X@DQX@# PUBLIC INTEREST CLAIMS AND RAISES THE SPECTER OF DISCRIMINATORY CONDUCT AFTER THE PROPOSED MERGER    heading 2 ` (#` hp x (# Notwithstanding the Applicants refusal to supply data regarding their local networks, there is evidence to suggest that WorldCom and MCI engaged in redlining during the buildout of their competitive fiberline networks in Atlanta.(See Exhibit 1). Considering the presence of such evidence, despite denials by WorldCom and MCI and their patent refusal to divulge this information, Rainbow/PUSH suggests that a full airing of the data would lead to the disclosure of a pattern of discrimination.   Twentysix percent of Atlanta#XX2PQXP##Xx6X@DQX@#s nearly 2.8 million residents are AfricanAmericans,#footnote reference#D footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) United States Census Data, 1996.D the vast majority of whom live in an approximately 250square mile region south and west of the downtown area. Along with the more than 500,000 residents who live in Atlanta#XX2PQXP##Xx6X@DQX@#s AfricanAmerican neighborhoods, there are more than 21,000 AfricanAmerican businesses.#footnote reference#8  footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) See Exhibit 1.8 As indicated by the attached map, however, WorldCom and MCI#XX2PQXP##Xx6X@DQX@#s local networks in Atlanta stretch north and east of downtown ! creating a pair of overlapping 40mile loops that bring wide ranging service to downtown businesses and wealthy suburbs, but which skirt the fringes of the AfricanAmerican community. While the networks also serve dozens of buildings downtown, in the areas where AfricanAmerican businesses are concentrated the WorldCom and MCI local telephone networks are virtually nonexistent. This data suggests that Atlanta is an example of where WorldCom or MCI have sought to exclude certain customer bases based on racial or economic criteria. And while Rainbow/PUSH does not have the resources necessary to fund research on WorldCom and MCI networks nationwide, we expect that if the Applicants were compelled to release this data Atlanta would be merely one example in a patter of discrimination. While this information is difficult for Rainbow/PUSH to obtain, it is precisely the kind of data the Applicants readily possess, yet refuse to divulge. As a threshold matter, the information collected in Atlanta signals the need for hearings to resolve the discrepancy between these facts and WorldCom#XX2PQXP##Xx6X@DQX@#s and MCI#XX2PQXP##Xx6X@DQX@#s public interest claims.  heading 1X` hp x (# (# THE APPLICANTS HAVE GENERALLY FAILED TO MEET THE BURDEN OF PROOF PLACED ON THEM BY THE BELL ATLANTIC/NYNEX DECISION    heading 1  (#` hp x (#    The standards, procedures and requirements for reviewing mergers that the Commission established in the Bell Atlantic/NYNEX Order, are, unequivocally, the benchmark against which the applications of WorldCom and MCI must be tested.#footnote reference#c  footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) The Common Carrier Bureau Chief requested in his Order that parties to this pleading cycle address in their comments #XX2PQXP# #Xx6X@DQX@#the merger framework the Commission articulated in the Bell Atlantic/NYNEX and BT/MCI merger proceedings to the proposed merger at issue in this proceeding.#XX2PQXP##Xx6X@DQX@# Specifically, the Bureau requested an identification of and a #XX2PQXP# #Xx6X@DQX@#discussion of the potential competitive effects and efficiencies resulting from the merger and other possible effects that may be relevant to the Commissions public interest assessment.#XX2PQXP##Xx6X@DQX@# Applications of WorldCom, Inc. and MCI Communications Corp. for Transfer of Control of MCI Communications Corp. to WorldCom, Inc.,Order, CC Docket No. 97211, at 23, 4 (rel. Feb. 27, 1998).c Consequently, the burden is on the applicants to demonstrate that the transaction will be in the public interest.#footnote reference#T  footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Bell Atlantic/NYNEX Order at 20009, 37T Nevertheless, and despite several opportunities to comply, WorldCom and MCI have yet to meet this burden. They do not adequately explain their proposed merger#XX2PQXP##Xx6X@DQX@#s competitive effects on local residential and small business customers in urban areas. They do not substantiate the origins of their efficiency claims or explain how those efficiencies will deliver the benefits that the Applicants claim. They dismiss the petitioners#XX2PQXP##Xx6X@DQX@# and commenters#XX2PQXP##Xx6X@DQX@# compelling showing without addressing the potential for redlining and creamskimming that the proposed merger will create. Consequently, their applications should be denied or, in the alternative, designated for hearing. heading 2X` hp x (#` (# A.THE APPLICANTS#XX2PQXP#'#Xx6X@DQX@# CLAIMS REGARDING EFFECTS ON LOCAL RESIDENTIAL AND SMALL BUSINESS HAVE NOT BEEN PROVEN    heading 2 ` (#` hp x (# Where public interest claims are made by merger applicants, the Bell Atlantic/NYNEX standard places on them the #XX2PQXP# #Xx6X@DQX@#burden of demonstrating that the proposed transaction . . . on balance will enhance and promote, rather than eliminate or retard, competition.#XX2PQXP##footnote reference#[  footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Bell Atlantic/NYNEX Order at 20063, 157.[#Xx6X@DQX@# A core element of the public interest benefits claimed by WorldCom and MCI is that their proposed merger will bring enhanced competition in the market for local residential and small business phone service.#footnote reference#6  footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Joint Reply at 19.6 But aside from assurances that the combined company #XX2PQXP# #Xx6X@DQX@#will have every incentive to expand MCI#XX2PQXP##Xx6X@DQX@#s current local service offering to attract new    customers . . .,#XX2PQXP##footnote reference#4 footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Id. at 20.4#Xx6X@DQX@# there are no underlying data to show that this incentive actually exists or that a merged WorldComMCI will act on it. In much the same way, WorldCom and MCI dismiss offhand concerns regarding the proposed merger#XX2PQXP##Xx6X@DQX@#s impact on residential local service to lowincome and minority residents. While the Applicants assert that #XX2PQXP# #Xx6X@DQX@#WorldCom#XX2PQXP##Xx6X@DQX@#s network is predominantly situated in urban areas adjacent to lowincome housing concentrations,#XX2PQXP##Xx6X@DQX@# this geography lesson is hardly testimony to prove a commitment to serve these communities. The history of urban development across teaches us that mere proximity is no guarantee that WorldCom#XX2PQXP##Xx6X@DQX@#s facilities, which are now in central business areas and bypass urban residential and small business customers, will be expanded to meet the needs of the economically disadvantaged and minority businesses. đFor their part, the Applicants have not provided pre or postmerger business plans that make this commitment. Nor have they provided information on the precise location of their networks, how many of those systems overlap, their plans for buildout and how those plans will translate to increased competition. What is clear from the information supplied by the Applicants is that the merger of WorldCom and MCI will eliminate a potential competitor in the market for local service. At the same time, the companies#XX2PQXP##Xx6X@DQX@# equivocation on their plans for residential service as a whole ! at times proclaiming they are #XX2PQXP# #Xx6X@DQX@#firmly committed#XX2PQXP##footnote reference#5 footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Joint Reply at 4.5#Xx6X@DQX@# and at others attaching amorphous conditions to those commitments#footnote reference# footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference)Also casting doubt on these #XX2PQXP# #Xx6X@DQX@#commitments#XX2PQXP##Xx6X@DQX@# are the recent remarks of MCI executives, referring to local residential resale as a #XX2PQXP# #Xx6X@DQX@#rathole#XX2PQXP#"#Xx6X@DQX@# down which the company will not #XX2PQXP# #Xx6X@DQX@#throw#XX2PQXP##Xx6X@DQX@# any more of its money. Timothy F. Price, Speech at the National Press Club, at 4 (Jan. 22, 1998). ! leaves grave doubts as to their true plans for competing for local residential customers. These public interest claims must be proven by the Applicants through reasoned analysis in the framework established by the Bell Atlantic/NYNEX Order and based on facts that are open to public scrutiny. heading 2X` hp x (#` (#  đTHE APPLICANTS#XX2PQXP##Xx6X@DQX@# EFFICIENCY CLAIMS ARE OVERBROAD AND FAIL TO MEET THE BELL ATLANTIC/NYNEX ORDER#XX2PQXP##Xx6X@DQX@#S REQUIREMENTS    heading 2 ` (#` hp x (# Under the Bell Atlantic/NYNEX Order, the Commission will consider efficiencies and synergies only if such claims are #XX2PQXP# #Xx6X@DQX@#sufficiently likely and verifiable.#XX2PQXP##footnote reference#a footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Bell Atlantic/NYNEX Order at 20063, 157.a#Xx6X@DQX@# Applicants who make efficiency claims that are #XX2PQXP# #Xx6X@DQX@#vague or speculative, and cannot be verified by reasonable means#XX2PQXP##footnote reference#@ footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Id. at 20064, 158.@#Xx6X@DQX@# will fail to satisfy their burden of proof.   For their part, the Applicants promise billions of dollars of savings and efficiencies that will be gained from their merger.#footnote reference#d footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) See Joint Reply at 1112; WorldCom Inc. Amendment No. 3 to Form S4 Registration Statement under the Securities Act of 1933 (#XX2PQXP# #Xx6X@DQX@#WorldCom S4#XX2PQXP##Xx6X@DQX@#).d Among the benefits to be derived from #XX2PQXP# #Xx6X@DQX@#core sales, general administrative cost savings,#XX2PQXP##Xx6X@DQX@# according to the Applicants, is that they will accelerate their local market entry and #XX2PQXP# #Xx6X@DQX@#make it more economically feasible for the combined company to offer local service to customers who might not be able to provide the revenues needed to support a higher cost structure.#XX2PQXP##footnote reference#6 footnote text#XE0 181`111X1##footnote reference##XE0 181`111X1#ۍ)footnote reference) Joint Reply at 12.6#Xx6X@DQX@# Yet aside from the generalized, multibillion dollar estimates included in the Applicants#XX2PQXP##Xx6X@DQX@# SEC filings, there is no quantum of evidence to support these claims. How will core sales, general and administrative savings #XX2PQXP# #Xx6X@DQX@#trickle down#XX2PQXP##Xx6X@DQX@# to expand local market competition? Where will the savings come from? How will a combined WorldComMCI be able to achieve its purported capital savings and yet maintain its commitment to aggressive local buildout? Rather than attempt to meet head on the challenges presented by the Bell Atlantic/NYNEX standard, the Applicants sidestep their burden of proof by supplanting fact with supposition. If they are to receive credit for these alleged procompetitive benefits, they must first be required to substantiate their conclusions with verifiable data. heading 1X` hp x (# (# III.THE APPLICANTS FAILURE TO ADDRESS CORE ISSUES AND PRESENT FACTS TO SUPPORT THEIR CLAIMS REQUIRES DISMISSAL OF THE APPLICATIONS OR EVIDENTIARY HEARINGS     heading 1  (#` hp x (# The Commission#XX2PQXP##Xx6X@DQX@#s extension of the pleading cycle in this proceeding and its demand that the Applicants demonstrate the public interest benefits of their merger under the Bell Atlantic/NYNEX standard evidence a resolve to investigate this merger thoroughly. By the same token, the public should be offered a reasonable opportunity to comment on the results of that investigation. To date, the Applicants have resisted all attempts to compel them to establish a record based on facts. Their continued failure to comply should result in either the denial of their applications or designation for hearing.    CONCLUSION  The Applicants in this proceeding have floated a giant balloon before the Commission ! colorful and attractive promises on the outside, nothing but hot air on the inside. WorldCom and MCI must have their claims put to the test of public scrutiny. Once that occurs and the facts are known, it is Rainbow/PUSHs belief that the truly anticompetitive and discriminatory nature of its consequences will lead the Commission to conclude that this merger should not be consummated.  * * * * *